US Tariffs Threaten Indian Refiners’ Exports
Global Trade Tensions Complicate Crude Oil and Refined Fuel Markets
New U.S. tariffs on India could create significant challenges for major private refiners, including Reliance Industries and Nayara Energy, impacting their ability to export refined fuel products and manage crude oil imports.
Navigating Shifting Trade Landscapes
President Donald Trump‘s imposition of a 25% tariff on India introduces uncertainty for companies like Reliance Industries and Nayara Energy. While there are no immediate government directives to halt Russian crude purchases, finding new markets for refined fuels will be crucial.
Impact on Refiners
An industry insider noted that Reliance faces potential margin pressures due to broader EU sanctions. However, Nayara Energy’s situation could be more severe, as the new tariffs may hinder its refined fuel exports, potentially reducing its refinery operating rates further. Sources indicate Nayara is already running its refinery at approximately 80% capacity, with 30% of its refined fuel typically destined for export.
Market Fluctuations and Strategic Sourcing
Global oil prices saw a slight dip, with Brent crude futures trading at $67.29 per barrel and U.S. West Texas Intermediate at $64.75. Both Reliance and Nayara will need to explore alternative crude supply sources to mitigate these disruptions.
Nayara Energy’s Strategic Moves
Nayara Energy recently approached Indian state-run refiners to offer its available volumes of petrol and diesel. However, the capacity of these state-run entities to absorb Nayara’s export volumes is limited. Nayara operates India’s second-largest single-location refinery in Vadinar, Gujarat, with an annual capacity of 20 million tonnes.
Company Expansion and Future Outlook
Nayara Energy accounts for roughly 8% of India’s total refining output. The company is actively expanding its presence in the petrochemical and alternative energy sectors. With 6,300 retail outlets currently, Nayara has ambitions to increase this network by over 50% by 2030. In a related development, EU member states implemented sanctions against Russia on July 18, targeting its oil and energy sector revenues.
